Walmart is Stepping into the Animal Business

Walmart (Ticker Symbol: WMT) is moving into the animal business in a big way.  The largest retailer in the world has recently been opening veterinary clinics in its stores and has plans to open up dozens more throughout the rest of 2019.  The company is also launching its first online pet pharmacy, attempting to step into the multi-billion dollar pet market. Walmart is opening, which will directly compete against PetSmart’s, which has an online pharmacy.  The company said it will stock more than 300 brands of medicine for dogs, cats, horses, and livestock and, of course, will offer low-cost prescriptions for its customers.

Walmart has just over 20 veterinary clinics in its stores currently and plans to grow that number to 100 by this time next year.  The company intends to open 9 new pharmaceutical clinics at its stores in the Dallas-Fort Worth area in June of 2019. Pet owners will be able to get their pet’s routine exams, vaccinations, and a variety of illnesses taken care of and, at the same time, can grocery shop or buy household goods.

Pet owners are becoming more health conscious of what they feed their pets as well and will spend more for organic and natural food options.  Sales of natural and fresh pet food jumped 70% in four years to over $500 million and that number doesn’t include online sales. Walmart has been providing more health-conscious brands like Blue Buffalo and Hill’s Science Diet to meet consumers’ demands for healthier food options for their pets.

Walmart’s stock took off to a great start to the year in 2018, trading to an all-time high of $109.98 on January 29th of 2018.  Unfortunately for Walmart’s shareholders, the stock took a negative turn after a disappointing first-quarter earnings report. The stock proceeded to sell off over 25% from it’s all-time high and began to form a rounded bottom basing pattern over the course of the next two quarters. Walmart’s stock finally shot higher after a positive third-quarter earnings report where the company announced championing its online business.  The stock sold off hard into the fourth quarter of 2018 putting in its first oversold condition in its Relative Strength Index in over two years. Walmart started off 2019 by breaking through a short term downtrend and continuing to trade higher and is currently up over 9% for the year.

(Chart above courtesy of ​​)  

Based on a survey of 17 analysts offering 12-month price targets, the average price target for Walmart’s stock is $112.62. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $100.10.

Walmart continues to be a dominant powerhouse in the retail space.  People are continuing to spend money on pampering and caring for their pets and Walmart plans to capitalize on the multi-billion dollar pet business.  Investors in Walmart should look two their second-quarter earnings report set to release on May 16th for more news and updates on Walmart’s move into the veterinary business.

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